Angered by EU solar duties, China probes wine imports

An EU Commission decision to impose tariffs on imports of Chinese solar panels has prompted Beijing to retaliate by launching an inquiry into allegations of the EU "dumping" wine on the Chinese market, raising fears of a trade war.

Beijing on Wednesday launched an anti-dumping probe into exports of European wine – of which France is the biggest producer – after the EU introduced tariffs on Chinese-made solar panels to protect its own manufacturers, raising fears of a broadening trade war.

China’s ministry of commerce said the government had begun an anti-dumping and anti-subsidy probe into EU wines at the request of Chinese wine makers.

"We have noted the quick rise in wine imports from the EU in recent years, and we will handle the investigation in accordance with the law," it said in a statement.

“Dumping” normally refers to selling products abroad at a lower price than at home, but some governments also take action if the price is thought to be below production costs or deemed unfair in some other way.

EU trade commissioner Karel De Gucht said the Chinese solar panels were being sold at up to 88% below cost on the European market, a policy that was harming the European solar industry.

He insisted that the new measures were not protectionist and that the EU was within its rights under international trade law to protect its interests.

“We have to re-establish a level playing field,” De Gucht told FRANCE 24. “We need to allow the Chinese to keep market share, but European companies must be allowed to compete on equitable terms."

China is the EU's second-largest trading partner, with more than $500 billion in two-way business in 2012.

EU divisions

Germany's economics minister, Philipp Roesler, said the EU decision was "a serious mistake" that could lead to an escalating trade war, while Paris welcomed the move as "balanced and responsible".

Beijing’s decision to launch a probe into alleged wine dumping could be a retaliatory response to French support for the EU Commission decision, as France is China's largest wine supplier.

In 2012, France sold China 140 million litres, worth around €600 million.

On Wednesday, Roesler told ARD television that Germany, Europe’s largest manufacturer of solar panels, wanted dialogue with China and not confrontation "to prevent a trade war that would encompass many more branches than just photovoltaics ".

An article on China's official Xinhua news agency said the European Commission's approval of the duties – despite German opposition – "points to the bizarreness of the EU's decision-making mechanism, or simply the obstinacy of the European Commission".

"As the EU's second-largest trade partner, China could have joined in efforts to help pull the bloc out of recession with the power of its massive demand," staff writer Liu Jie wrote.

"But the EU has continued to test China's patience and limitations, a situation that is unrealistic for China to accept," Liu said. "Protectionism on one side is bound to trigger protectionism on the other."

France's ministry of trade condemned the Chinese move as "inappropriate and reprehensible", with President François Hollande calling for an EU-wide meeting to underscore the bloc’s solidarity on trade issues.